U.S. Employment Cost Index (Q2)

The U.S. employment cost index barely rose in the second quarter. Total compensation grew 0.2% in Q2, or 2.0% y/y. And all of that increase was in the public sector (+0.6%) while the private sector, specifically service-producers, held back on raises/benefits. Overall wages & salaries grew 0.2%, while the y/y trend slowed to just 2.1%, which came on the heels of a 2.6% spurt in Q1, the fastest pace in over six years. When comparing the latest 12-month growth trend to 2014, wages and salaries have essentially been growing at the same rate, while benefits growth slowed. Despite a tighter labour market, and all of the stories about pay increases at various large firms, wage growth is not picking up meaningfully. This may not sit well with FOMC policymakers, notes BMO Economics.